Loan to Deposit (LTD) Ratio Malaysia
What is the LTD ratio of Malaysia banks?
While it is difficult to pinpoint exact numbers as BNM public records are not updated, Malaysian banks LTD ratio is high at around 85-90%.
Banks are currently looking to reduce the LTD ratio by increasing deposits. Thus there have been a slew of new FD promotions ongoing.
Does this mean that for every RM10 we deposit, banks can loan out RM8.50-9?
In a simplified way, you could say that banks are currently loaning out around RM8.50-9 for every RM10 available in deposits (85-90 cents on a ringgit).
Loan to Deposits ratio = Net Loans / Total Deposits.
Deposits include not only customer deposits but other deposits from banks & credit institutions. LTD is a liquidity ratio & can be defined as a policy determining lending practices & the banks ability to cover withdrawals made by customers in the short term.
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